Old National Bancorp(ONB) - 2025 Q1 - Quarterly Report

Financial Performance - Net interest income for Q1 2025 was $387,643,000, a slight decrease from $394,180,000 in Q4 2024, but an increase from $356,458,000 in Q1 2024[163] - Net income available to common shareholders for Q1 2025 was $140,625,000, down from $149,839,000 in Q4 2024 but up from $116,250,000 in Q1 2024[163] - Net interest income decreased by $6.5 million to $387.6 million compared to Q4 2024, influenced by lower accretion and fewer days in the quarter[177] - Noninterest income decreased by $2.0 million to $93.8 million compared to Q4 2024, reflecting lower company-owned life insurance and seasonally lower bank fees[178] - Noninterest expense decreased by $8.4 million compared to Q4 2024, including $5.9 million of pre-tax merger-related expenses[179] - Net interest income comprised 81% of total revenues for Q1 2025, highlighting its significance to overall earnings[183] - Noninterest income increased by $16.3 million to $93.8 million for the three months ended March 31, 2025, compared to $77.5 million in the same period of 2024, primarily due to the acquisition of CapStar and higher mortgage banking revenue[200] Loan and Deposit Growth - Total loans as of March 31, 2025, reached $36,413,944,000, compared to $36,285,887,000 at the end of 2024[163] - Total deposits rose to $41,034,572,000 as of March 31, 2025, compared to $40,823,560,000 at the end of 2024[163] - Loan balances increased by $128.1 million, or 1.4% annualized, to $36.4 billion at March 31, 2025, with a 2.3% annualized increase excluding $71 million of commercial real estate loans sold[176] - Total deposits increased by $211.0 million to $41.03 billion as of March 31, 2025, reflecting organic growth[225] Credit Losses and Asset Quality - Provision for credit losses increased to $31,403,000 in Q1 2025 from $27,017,000 in Q4 2024 and $18,891,000 in Q1 2024[163] - The provision for credit losses on loans rose to $31.026 million, a 30.1% increase from $23.853 million in the same period in 2024[199] - Net charge-offs on non-PCD loans increased by 210.8% to $18.836 million compared to $6.061 million in the prior year[199] - The allowance for credit losses on loans was $401.9 million at March 31, 2025, an increase from $392.5 million at December 31, 2024, driven by macroeconomic factors and loan growth[244] - Net charge-offs on loans totaled $21.6 million for the three months ended March 31, 2025, compared to $11.8 million for the same period in 2024, with annualized net charge-offs to average loans at 0.24%[240] - Under-performing assets rose to $482.3 million at March 31, 2025, compared to $456.3 million at December 31, 2024, with under-performing assets as a percentage of total loans at 1.32%, a 6 basis point increase from 1.26%[237] Capital and Equity - The Tier 1 common equity ratio improved to 11.62% in Q1 2025 from 11.38% in Q4 2024[163] - Shareholders' equity rose to $6.5 billion as of March 31, 2025, up from $6.3 billion at the end of 2024[227] - The Tier 1 capital to total average assets ratio was 9.44% as of March 31, 2025, compared to 9.21% at December 31, 2024[229] - The total capital to risk-weighted total assets ratio was 13.68% as of March 31, 2025, up from 13.37% at the end of 2024[229] Mergers and Acquisitions - Old National completed the acquisition of CapStar on April 1, 2024, and anticipates closing the merger with Bremer Financial Corporation on May 1, 2025[181] - Loans acquired in the CapStar transaction totaled $2.1 billion at the close of the transaction[196] - Deposits assumed in the CapStar transaction amounted to $2.6 billion at the close of the transaction[198] Interest Rate and Liquidity Management - The Federal Reserve's Federal Funds Rate was in a target range of 4.25% to 4.50% at March 31, 2025, down from 5.33% at the same time in 2024[184] - The company maintains a neutral interest rate risk position through disciplined balance sheet management[254] - Liquidity management strategies include maintaining strategic and contingency liquidity plans to ensure sufficient funding for balance sheet growth[257] - The company filed an automatic shelf registration statement with the SEC on May 31, 2023, allowing for the issuance of unspecified amounts of debt or equity securities[257] Risk Management - The company performs stress testing periodically to ensure sufficient capital to continue operations during economic stress, evaluating decisions related to pricing, loan concentrations, and mergers[231] - The company has adopted a Risk Appetite Statement to assess and mitigate various risks, including credit, market, and operational risks[232] - The interest rate management process aims to maximize net interest income while maintaining acceptable limits for interest rate risk[248]